Consumer transactions with merchants are increasingly being made payable on non-credit accounts such as those associated with stored value cards, reloadable cards, pre-paid cards, and debit cards. Non-credit accounts are those that utilize funds that the consumer has previously deposited into the non-credit account for payment or withdrawal purposes. The use of non-credit accounts are particularly prevalent among an unbanked consumer populous. This populous includes consumers that do not have a conventional relationship with a financial institution such as a banks or a credit union. In such cases, the consumer typically does not have a checking account upon which checks can be drawn by the consumer to make a purchase from a merchant. These unbanked consumers often experience difficulty in engaging in a transaction with a merchant that will not accept cash because the consumer does not have an account with a financial institution from which funds can be transferred for the transaction. Moreover, consumers doing cash-only business with a merchant typically have a poor credit rating in that credit bureaus (e.g.; Experian of Costa Mesa, Calif., TransUnion LLC of Chester, Pa., and Equifax, Inc. of Atlanta, Ga.) look to the credit history of the consumer's past borrowing to derive the consumer's credit worthiness.
One option available to an unbanked consumer is to purchase a reloadable portable consumer device (e.g.; a reloadable pre-paid card) typically offered for sale at a retail store of a merchant. Merchants offering such cards for sale include those operating supermarkets, big box retailers (e.g.; Sears, Walmart), etc. The purchase price of the reloadable pre-paid card is typically an initial service charge plus any funds that the consumer wished to have deposited into an account issued by an issuer that corresponds to the reloadable pre-paid card.
After the consumer pays this purchase price to the merchant, the consumer still cannot use the reloadable pre-paid card to conduct transactions with other merchants. Rather, the consumer must first ‘active’ the reloadable pre-paid card. To do so, the consumer must provide biographical data to the issuer or agent thereof. These biographical data may include the consumer's name, social security number, residential address, etc. These data may provided, for instance, to the merchant from whom the card was purchased such as for entry at a Point of Service (POS) terminal, for entry by the consumer using a toll-free number associated with the card, or for entry via a user interface at an Internet website accessible to the consumer.
Upon receipt, the issuer or its agent conducts a background check and other processes before activating the card for transactional use. Optionally, the issuer or its agent may subsequently have a ‘personalized’ replacement reloadable pre-paid card delivered to the consumer at their residential address, where the replacement card is embossed with the consumer's name. Thereafter, the consumer can take their reloadable pre-paid card to a merchant (or financial institution), give the merchant cash, and have the merchant add the cash to the account corresponding to the reloadable pre-paid card. As such, the consumer can re-load money onto the reloadable pre-paid card. Alternatively, or in addition, the consumer can request that each of its debtors make a direct deposit of amounts owed to the account of their reloadable pre-paid card. Examples of the consumer's debtors include an employer, a merchant making a refund of a prior purchase, etc.
The use non-credit accounts toward payment of reoccuring and regularly periodic payment obligations has become more prevalent around the world. For example, an unbanked consumer may provide the account of their reloadable pre-paid card to a merchant to whom the consumer owes a reoccurring payment obligation (e.g.; power, gas, or cable TV company, landlord, periodic insurance premiums, etc.).
Credit scoring agencies, such as credit reporting bureaus and companies in the lending community, use individual credit profiles and credit rating computation algorithms (e.g., Fair, Isaac and Company, Inc. of San Rafeal, Calif. (FICO®)) to derive credit ratings. These derivations, however, when determining a credit score of a consumer do not take into consideration the consistent and timely payment of reoccurring bills made with non-credit accounts. Consequently, a consumer using a non-credit account to make timely and regular payments over an extended period of time will have a credit rating that is unsatisfactory because it will not reflect the likely probability that the consumer will be able to pay back a loan as evidenced by the consumer's non-credit account transaction history. As a result of having a low credit score, for example, the consumer may be subjected to higher insurance premiums, rejections in housing rental requests, higher interest rates for purchases on credit, and/or a refusal on a loan.
Given the foregoing, it would be an advance in the debt market arts to provide techniques for assessing a consumer's credit risk on factors of the consumer's transaction history with merchants on their non-credit account.